Even Donations Asked Back... Desperate US 'Coin Genius'

FTX Founder of Cryptocurrency Exchange
Filed for Bankruptcy Protection Last November
Some Donation Recipients Say "Cannot Return"

Global cryptocurrency exchange FTX is reclaiming donations promised during the CEO tenure of its founder, Sam Bankman-Fried. Bankman-Fried pledged donations amounting to up to hundreds of billions of won, but FTX filed for bankruptcy protection in November last year.

According to the Wall Street Journal (WSJ) on the 7th (local time), John J. Ray, the CEO managing FTX's bankruptcy protection process, is working on recovering funds donated during Bankman-Fried's management period. Some recipients have expressed willingness to return the funds, but many have not complied with the return requests.

The founder of the bankrupt cryptocurrency exchange FTX, Sam Bankman-Fried.
[Photo by Yonhap News]

Previously known as the "crypto genius," Bankman-Fried cited "charitable activities" as one of his motivations for accumulating wealth and engaged in large-scale donations. The core charitable organization of FTX, the "Future Fund," had pledged donations totaling $160 million (approximately 199.9 billion won) by September last year.

The beneficiaries include over 110 organizations such as startups developing COVID-19 vaccines, donation centers where supermodel Gisele B?ndchen?who appeared in FTX advertisements?volunteers annually, and programs supporting education for students in underdeveloped regions of India and China. Among these recipients, the machine learning-related nonprofit Alignment Research and investigative journalism outlet ProPublica have expressed intentions to return the donations.

However, a considerable number of recipients have already used a significant portion of the funds received, and some have responded negatively to the return requests citing legal issues. In response, FTX management plans to pursue legal procedures through the bankruptcy court if the return demands are not met.

Meanwhile, local prosecutors consider donations as one of the illegal uses of customer deposits by Bankman-Fried, but Bankman-Fried's side denies this, claiming the donations were made from profits. Furthermore, if the donations were made while FTX was insolvent, this could be grounds for return, but pinpointing the exact time when FTX became insolvent is also challenging.

However, if the court fundamentally classifies FTX as a Ponzi scheme based on a multi-level fraud method, the process of reclaiming donations could become easier. Regarding this, bankruptcy law specialist Dove Kleiner of law firm KKWC told WSJ, "The most likely scenario is attempting to reach an agreement with the donation recipients."

This content was produced with the assistance of AI translation services.